Vermont Business with Dan D'Ambrosio

Green Mountain Coffee stock may be in for another wild ride as the company’s patent on K-cups expired this month and Starbucks is already out with a brewer of its own, Verismo, available online. CNBC’s Jim Kramer confirmed his sell recommendation from April.

I caught most of the 21st annual Vermont Economic Outlook Conference this morning, presented by The Vermont Economy Newsletter and its publisher, Dick Heaps, and editor Art Woolf. Art, an economics professor at UVM, also does the weekly business statistic for our Innovate section.

Gov. Shumlin kicked things off with an upbeat presentation of his budget and policy priorities for 2012. The governor covered some familiar territory, saying he sees “signs of life” in Vermont’s manufacturing sector, but expressing his concern that those manufacturers can’t find enough well-trained employees to run their high-tech factories. Thus, the importance of making our education system better.

Next, Chris Lafakis from Moody’s Analytics in West Chester, Pa., presented his economic outlook for the country and Vermont. These Moody’s guys are always entertaining, and often show up in national forums like network news and National Public Radio.

Lafakis covered a lot of ground in a short amount of time, but for me, the most striking point he made was that Corporate America is “humming,” in great financial shape with plenty of profits to invest. The question, Lafakis said, is whether they want to, concluding, ”We’re just waiting for business to take that leap of faith.”

Dick Heaps came next, focusing on Vermont’s economy in 2012. Heaps began by making the point that even though Vermont is a very small place, it matters to us too whether the Italians can sell their bonds, because if they can’t, it drags the whole world down and fewer people feel flush enough to take a skiing vacation. (Just look at the stock market today, down because of a threat to downgrade French debt.)

Heaps called for continued modest improvement in Vermont’s economy this year, with unemployment falling to 5 percent. As for jobs, he said “professional and business services” would lead the way in 2012, along with “leisure and hospitality” and “social assistance,” although he discounted that last one as low-paying.

Art Woolf came next with his presentation of the myths and realities of Vermont’s economy. Art began with the myth that Vermont has a small manufacturing base. Actually based on GDP, it’s almost identical to the nation at large — 11.1 percent of GDP in Vermont as opposed to 11.8 percent nationwide. Sure, Art said, that’s a pretty low percentage, but we’re no worse off here than anywhere else.

Next myth: manufacturing in Vermont is shrinking. Actually, it’s very healthy, Art said, although manufacturing employment is shrinking. Fewer people are producing more output.

Contrary to what many believe, Art said, agriculture is not the foundation of Vermont’s economy, providing just 1.4 percent of GDP, compared to 1.1 percent of GDP nationwide.

Overall, Vermont’s economy looks very much like the national economy, with the exception of professional and business services, which accounts for 5 percent less of our economic output than it does nationally. “These jobs are in cities,” Art said. “Burlington is not a city.” He explained that with only about 40,000 residents, a quarter of whom are students, Burlington would hardly show up on the radar of most states.

The next myth was one of the most entertaining — that if we’re not careful, Vermont will soon “look like New Jersey.” Art got a laugh by juxtaposing photos of Shumlin and New Jersey Gov. Chris Christie, then pointed out that New Jersey has 8.7 million residents compared to our 626,000. Since both states cover roughly the same land mass, Vermont would have to reach a population of 11 million to “be like New Jersey.” We won’t get there for the next 3,000 years, Art said.

I had to miss the last presentation, by William Watson, a professor of economics at McGill University in Montreal on “Fixing America the Canadian Way.”

The Canadians are on board with Sen. Patrick Leahy, D-Vt., and Sen. Bernie Sanders, I-Vt., who co-sponsored a bill that would make it a felony to sell fake maple syrup, increasing prison time from one year to five.

The Globe and Mail, one of Canada’s leading newspapers, based in Toronto, ran a recent editorial lauding the Vermont senators for their bill, and prodding Canadians to do more. “Quebec forbids the use of the word ‘maple,’ or of maple-leaf shapes or pictures on any bottle that does not contain 100-per-cent pure maple syrup. Other Canadian governments have not yet followed this lead,” the paper writes.

I spent the morning at Tech Jam, the job fair/high tech trade show that occupied the defunct Borders building this year. The average age of the crowd streaming through the aisles between company displays, and up and down the stairs from the first level to the second, was definitely under 21.

The crowd included middle schoolers as well, some of whom were remarkably well-versed in what they thought their futures would hold, like Douglas, 13, from Camels Hump Middle School in Richmond, who will be majoring in civil engineering, or might become a software developer or graphic designer. Or who knows, maybe all three. Camels Hump was among some 25 schools that sent students to Tech Jam.

Douglas’ father and grandfather are both civil engineers, and his dad, he says, is “almost a geek.” Douglas already has his first software in mind. It will be a program that will allow him to visualize snowboard tricks and then work out what they’re going to look like on a computer screen before he goes to the mountain to try them. Not a bad idea.

“It’s the reason I want to be a software developer,” Douglas says of his snowboard trick program.

Becky Burk is a Camel’s Hump parent/chaperone who has worked with the school for years, and who was shepherding Douglas and several other students around Tech Jam. Her son Riley is a student at the school. She asked that I not use any of the kids’ last names because of their age.

Sophie, 13, did not provide quite the details that Douglas did, but she was just as clear about why she was there: “We’re here to learn about what we want to do in college.”

All of the big players appeared to be present at Tech Jam, from Dealer.com with their ping pong table directly inside the front door, to Fletcher Allen with their videos of cool medical procedures on the second floor, to MicroStrain, MyWebGrocer, Chroma, Green Mountain Coffee, Logic Supply, BioTek, Agilion Aps…you get the picture.

But one company that not only surprised me, but also made me wonder if there’s any limit to what you can do in Vermont, was Greensea Systems of Richmond, which makes — get this — navigation and control systems for manned and unmanned underwater vehicles.

President and Owner Ben Kinnaman, a former salvage diver with undergraduate and graduate degrees in physics and robotics respectively, told me the U.S. Navy is one of their biggest clients, for salvage operations in water up to 20,000 feet deep.

“Especially now a lot of stuff falls in the ocean they don’t want other people to get,” Kinnaman said. So pilots topside, using joy sticks and various instrumentation, “fly” the Greensea-controlled machines down to the depths of the ocean, find the stuff, and get it back. Greensea also fabricates complete machines, in some cases, not just the nav and control part, and Kinnaman proudly says he has as much of the work done in Vermont as possible.

Kinnaman, who started as a salvage diver but then went on to pilot the unmanned salavage machines himself, had the typical entrepreneur’s thought of, “I can do a better job than these guys,” meaning whoever was making the machines he was piloting. He and his wife, who are both from North Carolina, and were living in Washington, D.C., began looking around for where to start their company.

“We were ready to get out of the rat race of Washington, D.C.,” Kinnaman said. “We wanted a good place to raise a family, and Vermont won.”

Why did Vermont win? “Maybe it’s that intangible,” Kinnaman replied.

Today, Kinnaman and his wife have a 2-year-old boy, and another boy on the way, and a company that seems to be thriving after five years in operation.

I ran into another person who didn’t want me to use his name, although for a different reason than Becky Burk had. This guy was at Tech Jam to find a new job, and he didn’t want his current employer to know. He was well over 21 years old, and doing quite well as a senior executive for a major telecommunications company. But he was unfulfilled.

“I spend all of my time on a plane,” he said. “It’s a quality of life issue. Sometimes you need to get out of conference rooms and off the plane to help a small company make its way in the world.”

This guy — let’s call him “The Seeker” — had already had some “great discussions,” he said, and had gotten two names — Cairn Cross of FreshTracks Capital, and Ken Merritt, of Merritt & Merritt & Moulton — that were just the folks he wanted to talk to, and that he was previously unaware existed.

“I did some searching on my own and I didn’t find those names,” The Seeker said. “This connected the dots.”

You may remember back in May we wrote about a little nonprofit in Waterbury called Grounds for Health that screens women in developing countries for cervical cancer, preventing many deaths. Grounds was created by a coffee executive and has remained tied to the coffee industry, doing its screening on women who work, or whose husbands work, in coffee coops in Mexico, Nicaragua and Tanzania.

Justin Mool of Grounds said coffee producers, importers, roasters and retailers raised a record $145,501 for the nonprofit in their annual green coffee auction. He said 52 importers and producers donated more than 25,000 pounds of green coffee, which was put up for bid by roasters and retailers in an online auction on June 7-8.

Green coffee donations from Royal Coffee, Inc., an importer based in Emeryville, Calif., were auctioned off for a whopping $27,424. Green Mountain Coffee Roasters donated more than $8,000.

Wavy Gravy recently celebrated his birthday with parties on both coasts, just outside of San Francisco and in New York, with musicians ranging from the remaining Grateful Dead to Steve Earle. Gravy was at all three Woodstocks, and got his name from B.B. King, according to V.F.

The demise of his ice cream flavor, says Gravy, had nothing to do with its ingredients, which consisted of chocolate fudge hazelnut swirl with roasted almonds and a Brazil-nut cashew base. Instead, his flavor was dumped, according to Gravy, because all the royalties went to send homeless kids to camp.

“Ah, O.K., I get you…all the profits were going to your damn hippie causes,” Spitznagel says. “That’s right,” replies Gravy. “It was the most politically correct ice cream known to humankind.”

GE Aviation, a fixture in Vermont since the 1950s, with facilities in Rutland City and North Clarendon covering 500,000 square feet, invited manufacturers including IBM, Dynapower and Rutland Plywood to their Rutland plant Wednesday to learn about energy savings measures the company has taken in cooperation with Efficiency Vermont over the past several years.

Plant manager Dan DiBattista says GE Aviation has completed 16 projects since 2006 that have reduced annual electrical usage by more than 15 million kilowatt hours and reduced carbon dioxide emissions by close to 8,000 tons. DiBattista estimates annual cost savings at more than $1 million for both facilities. He said the reduction in carbon emissions is like taking 474 cars off the road for a year, and the savings in electricity is enough to power 900 homes in Vermont for a year.

GE Aviation primarily makes air foils for the compressor portions of jet engines, including the 21st century GEnex engine that’s powering Boeing’s new Dreamliner jet. DiBattista says the GEnex engine is lighter, more efficient and quieter than current jet engines.

GE has gone way beyond changing light bulbs at its Rutland plants. For example, DiBattista commissioned an audit of its compressed air systems in 2007 by Ingersoll Rand that resulted in a bunch of projects to cut energy usage. Compressed air is a fixture in any industrial plant, and as DiBattista says, while air might be free, compressing it is not.

Just fixing leaks in the compressed air systems resulted in significant savings, but GE went further, replacing standard air compressors with variable speed drive compressors that only use enough energy to supply the amount of compressed air needed at any given time.

Another example of GE drilling down for energy savings came from the material it uses for forms, known as matrixes, to hold the irregularly shaped air foils while they are being worked. Once the air foil is completed, the matrix is melted away. In the old days, the matrixes included lead as an ingredient, making ventilation a critical issue and requiring 100 horsepower motors for the ventilation system.

DiBattista said GE dropped its use of lead in matrixes years ago, using new eco-friendly materials, but never thought to take a look at the motors it was using for ventilation. As it turns out, they’re now able to ventilate with an 8 horsepower motor as opposed to a 100 horsepower motor, resulting in tremendous energy savings.

Mike Leonard is Efficiency Vermont’s key account manager for GE Aviation and said he’s been visiting the Rutland facilities weekly for the past eight months. Leonard said the steps GE is taking — so-called “right-sizing” of equipment — is at the leading edge of energy efficiency, which is why Efficiency Vermont wanted other Vermont companies to see what they were doing.

“From an energy standpoint, efficiency to them is part of their culture,” Leonard said. ”As a representative from Efficiency Vermont, when I speak to people on the production line almost everybody has an idea for saving energy. That’s unique.”

Matt Polsky of the VA Mortgage Center wants vets to know about the Small Business Administration’s Patriot Express Loan Initiative, which gives Vermont vets an opportunity to get the money they need to start or grow a business.

Polsky says since the program was created in 2007 it has provided nearly $600 million in loan guarantees to more than 7,000 vets. Loans are available to active-duty service members, veterans, reservists, and military spouses. Vermont military members can get as much as $500,000 toward the start-up or expansion of a business, at interest rates between 2.25 percent and 4.75 percent.

You can use the loans for equipment, working capital, business-related real estate purchases, management costs, the cost of recovering from a natural disaster, and making sure the biz is sustainable in case of deployment.

To apply for one of these loans, set up an appointment with your local Small Business Development Center. There are 14 of these throughout the state. Go to http://www.vtsbdc.org/

Once again Green Mountain Coffee Roasters has posted huge numbers, reporting a doubling of sales this year over last in the second quarter, and once again, some analysts are still recommending investors sell their Green Mountain shares. Mark Astrachan of Stifel Nicolaus in New York, who follows Green Mountain closely, sent an e-mail at 5:33 this morning titled in part, “Shares up but Questions Remain.”

Among Astrachan’s concerns: K-Cup shipment growth remained “well below” prior years. Astrachan estimates 59 percent growth for the second quarter of fiscal year 2011, compared to 75 percent growth in the same quarter in 2010.

Also, Astrachan estimates price increases on K-Cups to offset rising coffee costs accounted for one-third of the huge sales growth, noting that further price increases are planned. “And while price increases are likely to be accepted,” Astrachan writes, “we believe they mask decelerating volume growth and could further contribute to already decelerating K-Cup shipments.”

Handy’s Lunch, a Burlington institution since 1945, caught the attention of FOXBusiness last week, which published a story online about the restaurant’s use of social media. FOXBusiness focused on Earl Handy’s mastery of Twitter to communicate with customers through a variety of hashtags, including #btvhangover, “for when you wake up the next day looking for food,” explained Earl to FOXBusiness.

Earl Handy is the grandson, and namesake, of founders Earl and Flora Handy, who emigrated from Lebanon to open the diner in Burlington just after the war. Grandson Earl told FOXBusiness Twitter allows him to keep the business “true to what my grandparents started which is great food at an affordable price.” He says each of three generations of Handys have left their mark on the business, and his legacy will be social media.
Here’s the FOXBusiness story.